AAA Dealmaking to increase in 2012

Dealmaking to increase in 2012

Only one person said he would be investing less, so a clear majority expect to invest more money in more deals this year compared with 2011.

Cédric Latessa, investment manager at Aster Capital, which manages the corporate venturing investments of French companies Schneider Electric, Alstom and Rhodia, said it was planning to double its dealmaking by volume and value this year.

Partly, this surge of increased investment follows a swathe of new groups formed in the past two years. As Loic Lietar, head of STMicroelectronics’ New Ventures programme launched formally last month, said: "We will do more deals in 2012."

Increased corporate venturing investment also follows a sustained wave of innovation transforming multiple sectors.

Shin Nagakura, executive managing director of Japan-based outsourcing provider Transcosmos (Silicon Valley office), said: "We will invest more than in 2011. We are at the infection point from social and mobile [developments]. We have to bet on that otherwise our future growth will go away."

However, a number of respondents said they planned to do more per round in the same number of or fewer deals as they concentrated on picking winners requiring greater round sizes to achieve success.

Mark Heesen, president of US trade body the National Venture Capital Association, said there were still uncertainties that could affect dealmaking. He said: "There could be a slight uptick in overall venture investing from 2011 if world economies stabilise. If we continue to be in an unstable environment we could see a slight decline in overall investing. IT appears strong while life-science investing in the US could be hit harder.

"If there is a better exit market there will be more deals as venture capitalists will have more time and hopefully money to invest in early-stage deals."

But such uncertainty can throw up opportunities. Richard Hsu, managing director of China at Intel Capital, said it was "hoping to invest at least as much as  year, but it depends on economy".

He added: "Potential entrepreneurs may not want to take the risk of a start-up and just hunker down in their current jobs but there may be more demand for capital because companies will want to grow to steal market share from competitors who are less aggressive."

Chart:
Will you invest more, the same, or less money in 2012 compared with 2011?
More: 61%
Less: 4%
Same: 35%

Will you invest in more, the same, or fewer deals in 2012 compared with 2011?
More: 58%
Less: 3%
Same: 39%

Source: Global Corporate Venturing

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